N.S. should be 'resolute' with Bowater lands

the Dexter government has been talking for months with Resolute Forest Products about buying 220,000 hectares of forest held by the former Bowater Mersey Paper Co.

IT’S no secret the Dexter government has been talking for months with Resolute Forest Products about buying 220,000 hectares of forest held by the former Bowater Mersey Paper Co.

The province has good long-term reasons to do this, as long as the price and the vision of what can be done with this asset are right.

As we’ve argued before, there are both defensive and proactive reasons to acquire this land, most of which was bought from absentee American companies and speculators by Mersey Paper’s I.W. Killam in the 1920s-1950s.

There’s a public interest in preventing this asset being sold for a fire-sale price and stripped for export logs, chips and fuel that would provide little value to the province. And wood fibre remains a key resource in rural Nova Scotia, with the potential to support new value-added industries in construction materials, biofuels and other innovative products.

But with talks well advanced — and the possibility we could be buying $100 million worth of Christmas trees before this Christmas — inevitable complications are springing up.

Resolute would like to dispose of all the Bowater assets — mill site, sawmill, biomass power plant and woodlands — in one sale, to cover its pension and closure costs in Nova Scotia. Yet not all the assets are as compelling a buy for taxpayers as the woodland.

The government has already determined the Oakhill sawmill is a no-go. Public ownership, even brief, would risk voiding the provincial lumber industry’s exemption from the export restrictions of the Canada-U.S. Softwood Lumber Agreement. At the very least, it could attract a U.S. complaint and temporary tariffs. The government is right in saying this is too big a chance to take.

There’s a better case for ensuring Brooklyn Power remains in service. Half to three-quarters of the sawmills in western and central Nova Scotia depend on the biomass plant to buy their hog fuel. For some, it’s a vital source of revenue, as it would be to any new value-added fibre-based industries in the area.

But this is not a business government should be operating. A government source says the intent would be to sell Brooklyn Power to a private operator quickly. Nova Scotia Power is an obvious candidate. But whoever it is, a realistic buyer should be secured in advance and taxpayers should not pay Resolute any more than the asset can be re-sold for.

The site of the paper mill, now stripped of papermaking gear, is a harder sell and comes with environmental liabilities. But government sees the pulp-refining equipment as an attractive asset for any company interested in commercializing biodiesel processes that could be competitive with heating oil in three to five years. And site remediation wouldn’t be necessary if there is a continued industrial use.

Clearly, that’s a more speculative proposition than temporarily buying the biomass plant or acquiring the woodlands. The latter could be well placed to benefit fairly soon from an upturn in the U.S. housing market that began in September (though diversifying into emerging housing markets is also a must).

So while it is worth positioning the province for potential biofuels development, it doesn’t follow that the government should invest much in this former mill site. It should be prepared to drive a very hard bargain with Resolute, which stands to benefit by avoiding remediation costs and surely has few takers for this asset.

The province should pay no more than a fair price for the woodland, either. And it should have a business plan to recover costs through forest revenues and possible resale of some of the land where the opportunity warrants.